Navigating 10 Different Trust Options for Estate Planning

Navigating the different trust options in the pursuit of crafting an optimal estate plan can be overwhelming. If you are worried that things might go wrong, contact us and we can help you create a plan that meet your needs.

To start, here are 10 common types of trusts that are used with estate planning.

1. Bypass Trust

This trust holds a portion of a deceased spouse’s assets and property. It uses the deceased spouse’s lifetime exclusion amount to potentially eliminate estate taxes. This trust is significant as estate tax calculations occur at the first spouse’s death, thus bypassing it for estate tax purposes at the death of the second spouse. It is often known as a credit shelter trust or family trust.

2. Generation-Skipping Trust

This trust allows you to distribute wealth to grandchildren or subsequent generations, free from taxation, by utilizing your lifetime exemption to offset potential taxes.

3. Special Needs Trust

This trust is designed for supporting individuals with special needs. This trust also ensures that the eligibility for government benefits is not jeopardized due to the financial assistance.

4. Charitable Lead Trust

This trust channels income to the charity of your choice for a specified period of time. Afterward, the remaining funds benefit you or your loved ones, bringing substantial tax advantages.

5. Charitable Remainder Trust

This is the reverse of the Charitable Lead Trust. This Charitable Remainder Trust provides income to you or your loved ones for a specific period of time. Afterwards, it directs the remainder of the assets in the charitable remainder trust to be distributed to the charity of your choice, yielding significant tax savings after the designated time or death.

6. Marital Trust

Geared toward the surviving spouse, this trust safeguards assets and property for their benefit and qualifies for the unlimited marital deduction. Assets are excluded from estate tax at the first spouse’s death but included for tax purposes.

7. Irrevocable Life Insurance Trust

Holding high-value life insurance, this trust receives the death benefit after the trustmaker’s passing. It exempts life insurance proceeds from the estate for tax purposes while serving liquidity needs.

8. Grantor Retained Annuity Trust

This irrevocable trust offers you an annuity for a specific period based on trust property’s value. Upon annuity completion, the remaining assets are distributed to named beneficiaries. This trust is advantageous for making substantial financial gifts.

9. Qualified Terminable Interest Property Trust

Offering income to the surviving spouse, this trust ensures beneficiaries receive the remaining assets upon the spouse’s death. It maximizes estate and tax exemptions, and is often applied in second marriages to protect children from a prior relationship.

10. Testamentary Trust

Created within a will, this trust safeguards assets for beneficiaries instead of transferring them outright. This trust is beneficial for those needing financial management or asset protection. However, testamentary trusts require probate before becoming active.

Let’s work together to determine the right trusts for your needs. Reach out now to schedule an in-person or virtual appointment. We’re here and eager to assist you.

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Davis, CA 95616

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Sacramento, CA 95825

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Roseville, CA 95616

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Monterey, CA 93940

San Antonio
18756 Stone Oak Pkwy, Ste 200
San Antonio, TX 78258

We operate on an appointment-only basis other than our Davis office.

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